GROUPS which rely on grants from Coventry City Council have been warned to expect a cut in their budgets next year.

Council leader Ken Taylor has written to them all saying they might face cuts of up to three per cent from April.

Organisations affected range from CV One - which has a budget of more than £5 million - and Coventry Sports Trust to smaller voluntary groups.

Tories running the council say they can no longer guarantee to protect such groups from the squeeze on the council's budget.

The council faces a funding gap of between £8 and 10 million for its next financial year.

On top of that, it has been hit by the rising cost of fuel. It recently has had to find another £800,000 a year just for running its street lights.

Deputy council leader Kevin Foster said it was likely the council would factor in a rise for inflation before looking to cut that amount by three per cent.

He stressed that some organisations would not be affected.

The Tory group has little room for financial manoeuvre after pledging to keep the rise in council tax below the inflation rate for the state pension.

Cllr Foster (Con, Cheylesmore) said: "Everyone is aware of the global financial challenges and the steep rises in fuel and food prices over the past few months, and these issues have had a big impact on the council's finances.

"In addition to these challenges, the government is also expecting us to make three per cent savings across the board and has factored this into the money we receive from them.

"The pressure is on for us to deliver these savings just as the pressures bite across the city and the rapid rise in government borrowing indicates that further money is unlikely to be made available to local authorities."

Cllr Duggins (Longford) said: "They are in this position, and have this lack of flex-ibility because they have run down the reserves in the way they have.

"They have also committed themselves to "prudential" spending - or "prudential borrowing".

He said the council had borrowed £20 million for its experiment in bringing in a call centre and new technology called Coventry Direct, and another £10 million to repair the roads. The money is to be repaid over 25 years.

He said: "That's £2.9 million a year (in repayments) that is still having to be paid, which they would otherwise have had.

"And let's not forget Coventry Direct has not made the savings they said it would."